Wednesday, November 21, 2007

Subic Bay mega yard piles up the orders

Lloyd's Confirms that Hanjin's Subic Plant Will be 4th Largest in the WorldSubic Bay mega yard piles up the orders.Marcus Hand

WHEN Hanjin Heavy Industries & Construction decided to invest in a $1bn shipbuilding yard in Subic Bay, it was a massive shot in the arm for country that had, in recent years, struggled to attract major inward investment.

The shipyard was one of the largest foreign investments made in the southeast Asian country in recent years, with its location being chosen over Malaysia and Vietnam, for what is set to be the fourth biggest shipbuilding facility in the world.

From officially signing the deal at the end of February last year, the yard has come up at an astonishing pace. The first steel was cut there earlier this year and its first dry dock will be completed by the end of the year.

The Subic Bay yard is already building up a comprehensive orderbook with orders for 34 containerships as well as a pair of bulkers and two aframax tankers. Although it is a greenfield site the South Korean shipbuilder is plunging right in, taking orders for ultra large containership tonnage.With the new yard has come the demand for related infrastructure and the company is also building a condohotel.

There are continued stories that Hanjin plans a second shipyard in the south of the country, in Mindanao, although these have been denied by the South Korean firm.

Local reports say though that Hanjin plans to invest Pesos 20bn ($456m) in northern Mindanao at a 3,000 ha site in Phividec Industrial Estate. However, it is being held up by municipal governments concerned over guarantees of hiring local workers.

Another proposed mega-investment from the maritime sector that has hit a speed bump over its location is Cosco’s planned $3bn hub at the former US naval base at Sangley Point close to Manila.

The plan was announced when Cosco top man Wei Jaifu meet with Philippines president Gloria Macapagal-Arroyo in June this year. Despite this fanfare, much of the groundwork remained to be done — including assessing whether the preferred site was actually feasible.

A few months later it is the suitability, or the lack thereof, that would appear to be the problem. A lack of supporting infrastructure and a need for major land reclamation could scupper the project.

“The first choice of Cosco is Sangley Point but there are many problems because there are no access roads,” Francis Chua, the Philippines government’s special envoy to China for trade and investments, told reporters on the sidelines of a business conference in early October.

Mr Chua also spoke of the 4,000 ha project’s need for major land reclamation.“They need a few hundred hectares for the project,” he says. “If Sangley, a lot of reclamation must be done so it would take time.

“The Chinese would like to invest soon and they have to wait a long time for Sangley Point to be ready.”

The Chinese company is now reported to be looking at some areas in Cavite, Subic, Bataan, Quezon and a small island in the south. However, in a blow to the Philippines, Cosco is also considering other countries in the region.